Since launch 10 years ago, iPhone is among the greatest product ever. However, iPhone shipment growth has slowed significantly in recent years. iPhone shipment declined 8% YoY in FY16 and is expected to increase by only 3% YoY in FY17. Also, Apple Inc.’s business in China faces intense competition and its sales has been declining for 7 consecutive quarters. Will the new iPhone rejuvenate Apple Inc., the largest listed company in the world, in terms of market capitalisation? Could iPhone8 enable Apple Inc. to gain its market shares back from Chinese handset makers? Is now still the right time to buy Apple Inc.’s shares? Invbots has worked on an unique research based on proprietary data-points to analyse the potential development of Apple Inc. and its upcoming new iPhone. We are happy to share with you some of our research highlights and our crafted investment strategies. You may also view our presentation here: https://youtu.be/w0Dgf4paKps InvBots.com (Invest Bots Limited), is a fast growing fin-tech with clear vision, game-changing strategies and extensive experience, network in global financial industry.

1. Apple/ iPhone8 investment
strategy review
Cici Chen, Katrina Chiu, Shirlly Peng, Vicky Li
11-Sep-2017

2. Buy before iPhone8 event?
Cici Chen, Senior Business Analyst

3. Review – Specification evolution
Source: Bitsnapper.com; Apple

4. Review – Software evolution
Source: Verto Analytics; Weibo
Competitive edge in
acquiring active users
The percentage of previous Android user switching to IOS is declining
2016
Ranking
yoy 2016 Android User Outflow
2016
Ranking
yoy 2016 IOS User Outflow

5. iPhone - Rising Bill of Materials
BOM Cost Breakdown – iPhone7
Source: Teardown.com
Up 49%
due to dual
camera!
Up 13% YoY

6. iPhone – Rising cost on display and camera
Bill of Materials (BOM) Cost Breakdown
Source: Morgan Stanley Research

7. iPhone 8 - Rumoured new specs
Release date
Sept. 12 2017
Three models
- Two standard (4.7”, 5.5”) – iPhone7S/7S Plus, or called
iPhone8/iPhone8 Plus
- One OLED (5.8”) – iPhone8, or called iPhone X
Expected features
◦ Edge-to-edge display
◦ Glass body
◦ Wireless charging
◦ Apple A11 chip
◦ Rear facing Touch ID sensor
◦ iOS 11 with improved Siri, P2P payments
◦ Face-scanning technology
◦ Vertical dual cameras on rear
◦ No home button
Source: MacRumours

8. iPhone 8 - Rumoured new specs
iPhone 8 iPhone 7s/7s Plus
Display OLED edge-to-edge LCD (IPS)
Design 5.8-inch, glass body, stainless steel
edges; size close to 4.7-inch
iPhone 7
4.7-, 5.5-inch respectively;
possible glass body, stainless steel
edges
Other (design /
features)
Top of display has notch; function
bar at bottom; no hard home
button
N/A
Camera (rear) Vertical dual-lens with 'smart
camera.' Augmented reality
capabilities; 4K video recording at
60 fps.
Incremental improvements; 4K
video recording at 60 fps.
Camera (front) Face ID to unlock with 3D sensing Incremental.
Charging wireless (inductive) charging wireless (inductive) charging
ID Face ID to unlock Touch ID
Processor A11 A11
Availability Limited Available soon after release
Price >$1,000 $649 and $769 respectively
Source: Forbes

9. iPhone supply chain I
Product Ticker Company
Apps Processor
Processor (System-on-chip) AAPL US Apple
Baseband/RF/PA/Othes
Baseband INTC US Intel
QCOM US Qualcomm
RF Front-end module (FEM) SWKS US Skyworks
AVGO US Broadcom
RF Envelope Tracking QRVO US Qorvo
RF Passive and Active Measurement (PAM) AVGO US Broadcom
QRVO US Qorvo
SWKS US Skyworks
RF Transceiver INTC US Intel
Antenna 300136 SZ Sunway (信维通信)
APH US Amphenol
2354 TT Hon Hai
4938 TT Pegatron
3231 TT Wistron
Bluetooth / WLAN 601231 CH Universal Scientific Industrial
Global Navigation Satellite System AVGO US Broadcom
Product Ticker Company
Camera
Camera Lens 3008 TT Largan
3406 TT Genius
Camera module 1415 HK Cowell
002456 CH O-film (欧菲光)
011070 KS LGI
009150 KS Semco
3D sensing 0522 HK ASM Pacific
011070 KS LG Innotek
HIMX US Himax
3105 TT Win Semi
Power Management
Power Management IC (PMIC) DLG US Dialog Semiconductor
MXIM US Maxim Integrated
ON US ON Semiconductor
TXN US Texas Instruments
Power Inductor/MLCC 2308 TT Delta
Growing
New
Source: Credit Suisse, Morgan Stanley

10. iPhone supply chain II
Growing
New
Product Ticker Company
Power Management
Power Management IC (PMIC) DLG US Dialog Semiconductor
MXIM US Maxim Integrated
ON US ON Semiconductor
TXN US Texas Instruments
Power Inductor/MLCC 2308 TT Delta
User Interface
Audio codec CRUS US Cirrus Logic
Audio amplifier CRUS US Cirrus Logic
NFC NXPI US NXP
Sensors - Barometer N/A Bosch Sensortic
Sensors - eCompass 6770 JP ALPS
Sensors (Light/Colour, 3D related) AMS AG ams
STM US STMicroelectronics
Acoustic CRUS US Cirrus Logic
6794 JP Forster Electric
2439 TT Merry Electronics
002241 CH GoerTek (歌尔股份)
2018 HK AAC Tech
Display 6740 JP JDI
LGD KS LGD
RADS US Radiant
005930 KS Samsung
6753 JP Sharp
Product Ticker Company
Haptics 6594 JP Nidec
ADI US Analog Devices
2018 HK AAC Tech
Touch Panel GIS US GIS
7915 JP Nissha Printing
3673 TT TPK
6456 TT GIS
Wireless charging 2301 TT Lite-On
AVGO US Avago
WATT US Energous Group
Others
Battery 000049 CH Shenzhen Desay Battery Tech (德赛电池)
6762 JP TDK
6758 JP SONY
006400 KS Samsung SDI
Casing 2474 TT Catcher
TFC US FTC
Ceramic Package/MLCC/Connector 6971 JP Kyocera
5334 JP NGK Spark Plug
Connector 002475 CH Luxshare Precision (立讯精密)
6806 JP Hirose
6087 JP Japan Aviation Electronics (JAE)
Source: Credit Suisse, Morgan Stanley

11. iPhone supply chain III
Growing
New
Product Ticker Company
Cover glass 300433 CH Lens Technology (蓝思科技)
002008 CH Han's Laser Technology (大族激光)
N/A Biel Crystal
CMOS Image Processor (CIS) 6758 JP SONY
Driver IC Package 6147 TT Chipbond
Foundry/Backend 2311 TT Advanced Semiconductor Engineering (ASE)
600584 CH JCET
005930 KS Samsung
2330 TT TSMC
Glue Logic LSCC US Lattice Semiconductor
GPU (self-developed after iphone7) IMG UK lmagination Technologies
HDI/FC-CSP 4062 JP Ibiden
Memory 6502 JP Toshiba
005930 KS Samsung Semiconductor
000660 KS SK Hynix
MU US Micron
Passive components 6976 JP Taiyo Yueden
6981 JP Murata
PCB 002635 CH Suzhou Anjie Technology (安洁科技)
3189 TT Kinsus
8046 TT Nan Ya PCB
3037 TT Unimicron
Precision component 603626 CH Kunshan Kersen Science & Technology (科森科技)
Proximity Sensor 6963 JP Rohm
Quartz Crystal N/A Daisinku
6779 JP Nihon Dempa
6724 JP Seiko Epson
TXC US TXC
Rubber ring 6098 HK Tongda
According to Invbots database, there are
at least 85 companies supplying iPhone
8 components, among which 82 are
listed.
Source: Credit Suisse, Morgan Stanley

12. 0
20
40
60
80
100
120
140
160
180
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
01/2000 01/2001 01/2002 01/2003 01/2004 01/2005 01/2006 01/2007 01/2008 01/2009 01/2010 01/2011 01/2012 01/2013 01/2014 01/2015 01/2016 01/2017
AAPL Stock Price (as of Sept. 3, 2017)
Trading Volume (US$) Share Price S&P 500
Apple Share price performance
iPhone (1st gen)
June 27, 2007
iPhone 3G
July 11, 2008
iPhone 6/6Plus
Sept 19, 2014
iPhone 6S
Sept 25, 2015
iPhone 7
Sept 7, 2016
Source: SPEEDA
iPhone 3GS
June 16, 2009
iPhone 4G
June 24, 2010
iPhone 4S
Oct 14, 2011
iPhone 5
Sept 21, 2012
iPhone 5C/5S
Sept 20, 2013

13. Model
Release
date
Days before the release
90 60 30 15 7 5 3 1
iPhone 5
09/21/2
012 27% 22% 13% 5% 5% 1% 0% 0%
iPhone
5C / 5S
09/20/2
013 5% 17% 1% -5% 0% 1% 3% -1%
iPhone 6
/ 6Plus
09/19/2
014 19% 12% 7% -1% 0% -1% 0% -1%
iPhone
6S
09/25/2
015 -12% -9% 0% 4% -1% 1% 1% 0%
iPhone 7
09/07/2
016 16% 11% 12% -1% 1% 2% 2% 1%
Average 11% 11% 7% 0% 1% 1% 1% 0%
Based on recent price performance before iphone8 event, the implied closing price of Sep 12 = US$162.8 ($165.7 - $159.8)
Model
Release
date
Days after the release
1 3 5 7 15 30 60 90
iPhone
5
09/21/2
012 -1% -5% -5% -6% -10% -17% -25% -37%
iPhone
5C / 5S
09/20/2
013 5% 3% 3% 4% 5% 11% 19% 7%
iPhone
6 /
6Plus
09/19/2
014 0% 1% 0% 0% 0% 7% 7% 18%
iPhone
6S
09/25/2
015 -2% -4% -4% -3% -3% 6% -6% -16%
iPhone
7
09/07/2
016 -3% -3% 3% 6% 5% 8% 1% 11%
Average 0% -2% 0% 0% -1% 3% -1% -3%
Pre/Post event price performance
Implied price performance before or after the launch of new iPhones

14. Global & China handset market

15. Global: Apple’s market share is declining
Market
share
1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17
Apple 18% 14% 14% 20% 15% 12% 13% 18% 15% 12%
Samsung 25% 21% 23% 20% 24% 23% 21% 18% 23% 23%
Huawei 5% 9% 8% 8% 8% 9% 9% 11% 10% 11%
Oppo 2% 3% 3% 4% 6% 7% 7% 7% 8% 8%
Vivo 2% 3% 3% 3% 4% 5% 6% 6% 6% N.A.
Others 48% 51% 50% 46% 42% 45% 44% 40% 39% 50%
Market share 2015 2016
Apple 16% 14%
Samsung 23% 21%
Huawei 7% 9%
Oppo 3% 6%
Vivo 3% 5%
Others 49% 46%
Source: IDC, Gartner

16. China: Apple’s market share is declining
Market
share 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17
Apple 15% 12% 11% 17% 13% 8% 7% 15% 9% 8%
Oppo 0% 8% 9% 12% 15% 16% 18% 25% 18% 19%
Huawei 11% 16% 16% 18% 16% 17% 16% 23% 20% 20%
Vivo 0% 8% 9% 11% 13% 13% 17% 22% 14% 17%
Xiaomi 14% 16% 16% 17% 10% 10% 9% 10% 9% 13%
Others 60% 41% 39% 40% 33% 36% 34% 42% 30% 23%
Market share 2015 2016
Apple 14% 10%
Oppo 8% 17%
Huawei 15% 16%
Vivo 8% 15%
Xiaomi 15% 9%
Others 41% 34%
Source: IDC

17. Huawei – A threat to Apple?

18. 80% Iphone7 users were replacement demand
iPhone
81%
Samsung
6%
Huawei
3%
Xiaomi
2%
Oppo
2%
Others
6%
IPHONE – IPHONE 7 PLUS
TOP 5 BRANDS USERS ARE SWITCHING FROM
of
20.7 %
17.8 %
7.7 %
4 %
3.9 %
iPhone
Meitu
Samsung
HTC
Letv
users change
to iPhone 7 Plus
iPhone
74%
Samsung
6%
Xiaomi
4%
Huawei
4%
Meizu
3%
Others
9%
IPHONE – IPHONE 7
TOP 5 BRANDS USERS ARE SWITCHING FROM
19.1 %
14.0 %
8.1 %
7.7 %
5.5 %
of
iPhone
Meitu
Samsung
HTC
Meizu
users change
to iPhone 7
Source: Weibo

19. Iphone users loyal to Apple brand
When searching
iphone8, China
users seldom
search for
competing
products, like
Huawei!
Source: Baidu

20. However, Iphone gradually losing users
to other Chinese handset makers
Source: Weibo
Handset model no % of this model users churned from iphone iphone Ranking among all brands
High end
Vivo X7 20% 2
Huawei P9 38% 1
Oppo R9 22% 2
Huawei Honor 8 23% 2
Meizu Pro 6 18% 2
Letv Max 2 19% 2
Xiaomi Mi 5 17% 2
Low end
Vivo V3Max 11% 4
Huawei Maimong 5 25% 1
Oppo A59 14% 4
Huawei Honor 6X 11% 4
Meinam note 3 17% 3
Letv Le 2 22% 2
Xiaomi Note 4 13% 3

21. Huawei biggest threat to iphone: most
Huawei P9 users churned from iphone
iPhone
38%
Huawei
20%
Samsung
14%
Xiaomi
9%
Oppo
4%
Others
15%
Huawei – P9
Top 5 Brands users are switching from
iPhone Huawei Samsung Xiaomi Oppo Others
4.4 %
3.3 %
3.0 %
2.8 %
1.7 %
Huawei
Samsung
Sony
HTC
iPhone
of
users change
to Huawei P9
Source: Weibo
1.7% of iphone users switched to Huawei P9

22. Huawei handset strategy

23. Huawei Handset history
• Early stage
• Start phone development in early 2000
• Develop feature phones, shipped as complimentary products of telecom
equipment products; telecom carriers as key customers
• Focus on low price strategy
• Weak brand image, sometimes without logo on phones
• Explosive Growth Period Since 2013
• Global brands lost their advantages as differences in quality of smartphones
becomes less
• Strong focus on smartphone and chipset R&D
• Start building its own image with patriotic values
• Enter the high-end market

24. Huawei smartphone shipments
worldwide (in million units)
Q1 2013 - Q2 2017
Source: Statista
9.3 10.2
12.5
16.4
14.7
20.3
16.5
23.6
17.3
29.6
27.3
32.7
28.1
32.1
33.6
45.4
34.2
38.5
0
5
10
15
20
25
30
35
40
45
50
Unitshipmentinmillions
25%
33%
37%
32%31%
58%
42%
32%
28%
62%
57%
44%
55%
79%
74…
58%
66%
94%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Huawei (% of iPhone
shipments)
Q1 2013 – Q2 2017

25. Huawei's revenue by geographical region
from 2012 to 2016 (in RMB bn)
Source: Statista

26. Huawei strategic differences between handset series
Series Type Target customers Remark
Mate High-end Middle-aged
businessmen
• Best components
• Offline distribution platform
• Competitors: Apple, Samsung
P High-end Young businessmen • Camera, Photo-taking, Design
G/Y/Maimang low-end Operating companies • Low cost-effectiveness
Honor Middle-end Youngsters • High Cost-effectiveness, usually follow’s the
important functions of P series
• Online distribution platform
• Competitors: Xiaomi, Meizu
Enjoy Low-end Family / Youngsters • Affordable price
• Competitors: Redmi, Meizu
Nova Middle-end Fashionable youngsters • Design, Photo-taking
• Offline distribution platform
• Competitors: Oppo, Vivo
Source: http://www.pc841.com/shoujizhishi/80492.html, https://www.iznb.cn/article/20278,
https://www.zhihu.com/question/20229490

27. Apple
Huawei
Sep 2014
Sep 2014
Sep 2015
Sep 2015 Nov 2015
Sep 2016
Nov 2016
Sep 2017
Oct 2017
Iphone 6, 6plus
Ascend Mate 7
Iphone 6s, 6s plus
Mate S Mate 8
Iphone 7, 7plus Iphone 7s, 7s plus, 8
Mate 9
Mate 9 Pro
Mate 10

28. Huawei following iphone pricing strategy
2,760
4,140
4,780
5,000
2,136
3,657
3,450
3,788
5,288 5,288 5,388
6,586
-
1,000
2,000
3,000
4,000
5,000
6,000
7,000
2014 2015 2016 2017
Huawei Mate Series Huawei P Series Apple
RMB
Source: SeekingAlpha, Apple official website, Toutiao, Gadgets360

29. Specification Comparison – iphone 8 and Mate 10
Category Specification Apple iphone 8 Huawei Mate 10 Winner
Display Size 5.1” ; Full OLED Screen ; Glass
front and back
6.1” ; Full OLED Screen Huawei
Display Resolution 1242 x 2800 pixels 1080 x 2160 pixels Apple
Memory Internal Storage 64/256GB 128GB Apple
Camera Front 8 MP 16 MP+8 MP Dual Huawei
Camera Rear 12MP+12 MP Dual lens;
Reconfigured for better AR apps
20MP+20 MP Dual lens Huawei
Platform Operating system iOS 11 Android,7.1.1 Nougat Not
comparable
Platform Chipset Apple A11 HiSilicon Kirin 970 Not
comparable
Platform CPU Quad-core Octa Core Processor Huawei
Platform RAM 3GB 6/8 GB Huawei
Battery Type Li-Ion 2700mAh battery Li-Po 4900mAh battery Huawei
Charging Wireless/Fast Yes/ Yes Yes / Yes
Other features Water Resistant Yes Yes
Others 3D Face Recognition, Stainless
steel edges, Virtual Home Button
Chip with Artificial Intelligence, 5G,
Solved problem of slow Android system
Sources: gsmarena, Gizbot

30. Huawei Vs Apple - Chipset
Apple iphone8 – A11 Huawei Mate 10 – Kirin 970
Processor Core 4 x 3.0 GHz Cortex 4 X 2.4 GHz Cortex-A73 and 4 X 1.8 GHz Cortex-A53
Word Length 64 bit 32 bit
GPU PowerVR Series 7XT GT7600 ARM Mali G72 MP12 (12-core)
NPU N.A. Yes ( drives the Kirin 970’s mobile artificial intelligence
platform; enable cloud-based AI and on-device AI to run
alongside each other, faster than ever before)
HMP (Heterogeneous
Multi-Processing)
Yes N.A.
Manufacturing Process 10nm 10nm
Camera/ISP Dual ISP with face and
motion detection
Dual ISP with face and motion detection
Cellular Modem N.A. 4.5 LTE, LTE Cat.18,
Video Capture and
Playback
N.A. Up to 4K Ultra HD @ 30fps
Source: MacRumors, Digital Trends

31. Huawei Strategies
• Multiple models
• Focus on producing one best product -> drives up the profit margin ->
put resources into R&D
• Products: large screens, long life, originally developed Kirin processors
• Focus on R&D - AI  want to produce an AI-focused “Superphone” in
2020
• Machine Learning Algorithm to ensure the handset continues running
fast and smooth rather than slowing down over time as smartphones
generally tend to do
• Machine learning can track trends and behavioral patterns, making
the device more efficient by correctly anticipating its usage

32. Huawei SWOT analysis
Strengths Weaknesses
• Focus on innovation
• Sold at a reasonable price for its value
• Technology independence: originally developed
Krin processors
• Development on Artificial Intelligence phone
• Not known in mobile phones as compare to its
other strong competitors in the market
• Distribution channel is not strong enough
• Low frequency of system updates
• Unsatisfactory UI system
Opportunities Threats
• Financial muscle is strong, can target more
market segments e.g. overseas market
• Intense competition in the smartphone industry
• Rapid technology change
Source: https://bohatala.com/huawei-marketing-plan/,
https://creately.com/diagram/example/io0o743p1/Huawei%20SWOT%20Analysis%20

33. Is iphone8 popular among
online search users?

34. Keyword search: high iphone8 demand
Globally (ex-China)
• iphone keywords search
volume soaring
• Iphone8 popularity exceed
iphone7
• Iphone new user demand is
high; stable replacement
demand
• Stable churn rate of iOS; rising
churn rate of Android
China
• Iphone8 search volume is rising 3 times
in 3 months
• When searching iPhone 8, people tend
to search old iPhone models
• iPhone 8 is more popular among first-
tier cities e.g. Beijing, Shanghai
• Replacement of old iphone is a popular
keyword -> strong replacement demand
• more female and young customers
owning older models are likely to make
purchase upon iPhone 8 release

35. Global: iphone keywords search volume
soaring…
Source: Google Adtrend, Invbots.com
Apple = summation of 22 keywords
related to Apple handset model
Huawei = summation of 14
keywords related to Huawei
handset models
Samsung = summation of 15
keywords related to Samsung
model

36. Global: Iphone8 popularity exceed iphone7
Iphone8 keyword is
growing fast, above
last year level of
iphone7 (last data
was as of 8-Sep-
2017)
Source: Google Adtrend, Invbots.com

37. Global: Iphone new user demand is high;
stable replacement demand
Source: Google Adtrend, Invbots.com
New users = summation
of 1 keyword of which
new iphone users will
normally search
Existing users =
summation of 4
keywords of which
existing iphone users will
normally search

38. Global: Stable churn rate of iOS; rising churn
rate of Android
Source: Google Adtrend, Invbots.com
iOS to Android users =
summation of 5
keywords of which new
iphone users will
normally search;
Andriod to iOS users =
summation of 2
keywords of which
existing iphone users will
normally search

39. China: Iphone8 popularity similar to iphone7
in 2017
Source: Baidu Index

40. China: Iphone8 search volume is rising 3
times in 3 months
Source: Baidu Index

41. China: When searching iPhone 8, people tend
to search old iPhone models
Source: Baidu Index

42. China: iPhone 8 is more popular among first-
tier cities; Huawei popular in lower-tier cities
Source: Baidu Index

43. China: Iphone is more popular among female,
whereas male prefer Huawei more
Source: Baidu Index

44. China: Weibo data trend similar to Baidu
Iphone has
shown stronger
keyword trend
on weibo than
Huawei
Iphone is more
popular among
female and
younger
generation
Source: Weibo

45. China: Iphone8 and iphone7 keywords are
popular among top 4 cities
-> strong potential replacement demand
Source: Baidu Index

46. China: Replacement of old iphone is a popular
keyword -> strong replacement demand
Source: Baidu Index

47. China: Replacement is popular among male
customers, and youngsters
Prediction: more female and young customers owning older models are
likely to make purchase upon iPhone 8 release
Source: Baidu index

48. Will iPhone8 succeed in
China handset market?
A study through Invbots online survey platform

49. In August, Invbots conducted a survey on China handset market
through our own online survey system and 3rd party system.
Through our analysis of 1,114 samples of survey results, our key
conclusions include:
Invbots survey results: High replacement demand
• It is time to buy a new phone because of long used time.
• iPhone users tend to buy new phone because of new
features.
• Larger memory and larger battery are top two important
features.
• iPhone users have higher budget for new phone and iPhone8.

50. iPhone users: Lower average age
All users’ average age: 32.88 Apple users’ average age: 30.74
Average age
Apple 30.74
Samsung 34.04
Huawei 35.37
Xiaomi 34.62
OPPO 33.79
Vivo 32.44
10~20
1%
20~30
40%
30~40
43%
40~50
11%
50~60
4%
60~70
1%
Above 70
0%

51. Long used time: Time to buy a new phone
1%
12%
31%
43%
11%
2% 0% 0%
Less than 3 months
3~6 months
6 months ~ 1 year
1~2 years
2~3 years
3~4 years
4~5 years
More than 5 years
All users’ average used time: 1.27 years Apple users’ average used time: 1.31 years
Q: How long did you use your current phone?

52. Top reasons for iPhone users to buy new phone:
new features
Q: Reasons for changing phone (max 3 choices)?
No.1 reason No.2 reason No.3 reason
Apple
New features
(44%)
Used for too long
(36%)
Too slow (35%)
Samsung Too slow (51%)
Used for too long
(38%)
Low level functions (37%)
Huawei Too slow (53%) Broken (43%) Used for too long (32%)
Xiaomi Broken (51%) Too slow (46%) Lost (33%)
OPPO Too slow (48%)
Used for too long
(47%)
Broken (45%)
Vivo Too slow (60%) Broken (53%) Lost (35%)
New features of iphone8 attract iPhone users to
buy a new phone, but most important features
of a new phone remains the basic features.

53. Larger memory and larger battery are top two important features
Q: What are preferred features of new phone (max 3 choices)?
No.1 reason No.2 reason No.3 reason
Apple Bigger memory size (80%) Larger battery capacity (57%) OLED screen (36%)
Samsung Bigger memory size(79%) Larger battery capacity (57%) Larger screen (43%)
Huawei Bigger memory size(88%) Larger battery capacity (70%) Larger screen (31%)
Xiaomi Bigger memory size(90%) Larger battery capacity (73%) OLED screen (28%)
OPPO Bigger memory size(83%) Larger battery capacity (62%) Larger screen (38%)
Vivo Bigger memory size(91%) Larger battery capacity (74%) Larger screen (30%)
Bigger memories and larger battery capacity are
highly preferred features of smartphone. For
current iPhone users, OLED screen is also an
attractive feature.

54. iPhone users: Much higher budget for new phone
Below RMB 2,000
10%
RMB 2,000~3,000
21%
RMB 3,000~4,000
16%
RMB 4,000~5,000
12%
RMB 5,000~6,000
19%
RMB 6,000~7,000
13%
RMB 7,000~8,000
6%
RMB 8,000~9,000
2%
RMB 9,000~10,000
1%
Above RMB 10,000
0%
Q: What is your budget for new phone?
All users’ average budget: RMB 4,409
Budget for new phone
Apple 5,815
Samsung 4,515
Huawei 3,461
Xiaomi 3,074
OPPO 3,526
Vivo 3,131
Apple users’ average budget: RMB 5,815

55. Below RMB
2,000
4%
RMB 2,000~3,000
11%
RMB 3,000~4,000
14%
RMB 4,000~5,000
14%
RMB 5,000~6,000
22%
RMB 6,000~7,000
21%
RMB 7,000~8,000
10%
RMB 8,000~9,000
2%
RMB 9,000~10,000
1%
Above RMB 10,000
1%
Q: What is your budget to buy a phone with iPhone8 features?
All users’ average budget: RMB 5,123 Apple users’ average budget: RMB 6,197
Budget for iPhone
Apple 6,197
Samsung 5,082
Huawei 4,425
Xiaomi 4,256
OPPO 4,328
Vivo 4,286
iPhone users: Average budget of RMB 6,197 for iPhone8
Around 8% of iPhone users are affordable to
buy iphone8 at RMB 8,000 or above; 25% of
users with budget at RMB7,000 or above.

56. Time to buy Apple?
Vicky Li, Senior Business Analyst

57. iPhone: 63%
iPad: 10%
Mac: 11%
Servce: 11%
Other product: 5%
Revenue breakdown by product (%)
As of FY16
-15%
-10%
-5%
0%
5%
10%
15%
20%
25%
iPhone revenue breakdown, yoy%
0%
5%
10%
15%
20%
25%
30%
1QFY15
2QFY15
3QFY15
4QFY15
1QFY16
2QFY16
3QFY16
4QFY16
1QFY17
2QFY17
3QFY17
Service revenue
breakdown, yoy%
• iPhone sales accounts for the largest
share, expected to grow in the next few
quarters but with a decline trend in a
longer term
• Service revenue is expected to continue
double digit growth
Apple revenue: iPhone remains dominant
Source: Annual report, Invbots

58. High reliance on 1Q as rising replacement demand
• The first quarter accounts for above 30% of annual revenue and around 40% of annual net income
Revenue
Net income
Source: Annual report, Invbots
32% 32%
35% 35%
33%
34%
33% 34%
40%
38%
36%
37%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
Quarterly revenue/net income as % of annual revenue/net income

59. 373
395
418
440
480
520
560
600
623
645
668
690
719
738 753
0
100
200
300
400
500
600
700
800
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
10%
Total user base (million) with yoy %
Growth of iOS user base decelerates
• Total user base is large but the growth decelerates
• iPhone6/6plus attracted lots of new users due to larger screen and other new features
• The growth driver of iPhone demand will be the replacement more than the gross add
Source: Credit Suisse, Invbots
26
44
28 23 26
44
28 23 26
44
29 23 27
45
29 23 27
45
29 24 27
49
100
81
57 50
101
58 58 59
102
64 64 65
121
62 64 65
131
67 69 70
-31
-58
-38
-31 -32
-60
-39
-31 -33
-64
-41
-33 -35
-67
-44
-35 -37
-71
-46
-37 -40
-100
-50
0
50
100
150
200
Estimation on iOS user base net adds (million)
Gross add Replacement Second hand phones
Source: Annual report, Invbots

60. Strong replacement demand in FY18
32.00
28.50
31.01
36.23
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
FY14 FY15 FY16 FY17
iPhone replacement cycle
Replacement month Adjust replacement rate
FY15 iPhone 6 Launch: Strong cycle
Replacement: 2.38 years
480 mn users
807 mn users
29 months replace
30 months replace
29%+ Gross add 1%+ Gross add
4.5% Churn 4% Churn
FY15 iPhone 6 Launch FY18 iPhone 8 Launch
• iPhone6/6plus is identified as strong cycle due to larger screen and other new features
• Two years of weak replacement due to limited compelling new features
• All new design and notably superior functions likely trigger replacement demand
Comparison of iPhone6 and iPhone 8 launch metrics
Source: Credit Suisse, Invbots

61. Strong product cycle as FY15 (iPhone 6)
• iPhone is expected to grow at 19% in FY18 and 3% in FY19
• It’s expected to be a stronger product cycle in FY18/19
Source: Annual report, Invbots
51.0
43.7
35.2
39.3
74.5
51.2
47.5
58.0
74.8
51.2
40.4
45.5
78.3
50.8
41.0
45.6
70.3
61.0
64.8
56.1
64.1 65.3
69.9
59.8
48.2
68.9
74.5
62.7
48.2
68.2
78.3
64.8
47.0
70.3
81.5
66.1
-30%
-20%
-10%
0%
10%
20%
30%
40%
50%
60%
70%
Historical & Estimated quarterly iPhone shipment (million) with yoy %

62. 45%
41%
32%
46%
12%
31%
37%
35%
43%
28%
31%
19%
0% 20% 40% 60% 80% 100%
Q4FY16
Q1FY17
Q2FY17
Q3FY17
iPhone 7/7 plus sales mix, %
iphone 7 iphone 7 plus Others
7%
47%
42%
43%
8%
19%
29%
28%
85%
34%
29%
29%
0% 20% 40% 60% 80% 100%
Q4FY15
Q1FY16
Q2FY16
Q3FY16
iPhone 6s/6s plus sales mix, %
iphone 6s iphone 6s plus Others
Limited iPhone8 shipment/ASP contribution until FY18
Source: CIRP
• We expected limited shipment of iPhone 8 in Q4FY17,
around 5 million
• It’s estimated that iPhone 8 shipment in
Q4FY17/Q1/Q2FY18 together will be 70 mn
Q4FY17
Module iPhone7s
iPhone 7s
plus iPhone 8 Older models Expectation
Mix 20% 10% 10% 60%
Price (US$) 650 750 1000 600 665
Q1FY18
Module iPhone7s
iPhone 7s
plus iPhone 8 Older models Expectation
Mix 20% 15% 40% 25%
Price (US$) 650 750 1000 400 803
Q2FY18
Module iPhone7s
iPhone 7s
plus iPhone 8 Older models Expectation
Mix 20% 15% 45% 20%
Price (US$) 650 750 1000 400 833

63. Cyclical Revenue and earnings growth ahead
-60%
-40%
-20%
0%
20%
40%
60%
80%
1QFY15
2QFY15
3QFY15
4QFY15
1QFY16
2QFY16
3QFY16
4QFY16
1QFY17
2QFY17
3QFY17
4QFY17
1QFY18
2QFY18
3QFY18
4QFY18
1QFY19
2QFY19
3QFY19
4QFY19
1QFY20
2QFY20
3QFY20
4QFY20
Quarterly Revenue/EPS growth
Revenue growth EPS growth
-20%
-10%
0%
10%
20%
30%
40%
50%
FY15 FY16 FY17 FY18 FY19 FY20
Yearly Revenue/EPS growth
Revenue growth EPS growth
Source: Financial report, Invbots

64. 34%
35%
36%
37%
38%
39%
40%
41%
42%
1QFY14
2QFY14
3QFY14
4QFY14
1QFY15
2QFY15
3QFY15
4QFY15
1QFY16
2QFY16
3QFY16
4QFY16
1QFY17
2QFY17
3QFY17
Gross margin versus guidance (%)
Gross margin % (high)
Gross margin % (low)
Gross margin (actual/forecast)
Apple: beating 7 out of 15 quarters beating
EPS guidance
• Always inline or beat the guidance
• 4QFY17 Guidance beat the consensus,
indicating management confidence
Source: Company release, Invbots
4QFY17 Revenue Gross margin
Operating
income
Revenue (US$ bn) (high) 52.0 38.0% 6,800
Revenue (US$ bn) (low) 49.0 37.5% 6,700
Revenue (actual/forecast)
(US$ bn)
50.3 37.9% 6,714
Guidance vs. forecast Inline Inline Inline
Surprise % 0% 0% 0%
1QFY
14
2QFY
14
3QFY
14
4QFY
14
1QFY
15
2QFY
15
3QFY
15
4QFY
15
1QFY
16
2QFY
16
3QFY
16
4QFY
16
1QFY
17
2QFY
17
3QFY
17
G vs
A
Inline Above Inline Above Above Above Above Above Inline Inline Inline Inline Above Inline Inline
Surpri
se %
0% 4% 0% 5% 12% 5% 3% 1% 0% 0% 0% 0% 0% 0% 0%

65. 1.2% 1.3%
1.4% 1.5%
1.8%
1.9%
2.3%
2.6%
2.9% 3.0%
3.2%
3.4%
3.6%
3.9%
4.3%
6.9%
5.7%
5.1%
3.7%
5.1%
4.6%
5.8%
5.4%
6.5% 6.6% 6.7% 6.8% 6.9% 7.0% 7.1%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
0
20,000
40,000
60,000
80,000
100,000
120,000
140,000 FY2014A
FY2015A
FY2016A
FY2017E
FY2018E
FY2019E
FY2020E
FY2021E
FY2022E
FY2023E
FY2024E
FY2025E
FY2026E
FY2027E
FY2028E
Total dividend paid Share repurchase Total shareholder return
Dividend yield % Shareholder return %
Falling shareholder return ahead of iPhone8 event
Source: Annual report, Invbots

66. -10.0%
-5.0%
0.0%
5.0%
10.0%
15.0%
20.0%
Average price (T+1) / repurchase price (T+0)
Repurchase price implying further upside ahead
Source: Annual report, Invbots
average price (T+1) /
repurchase price (T+0)
Implied
4QFY17 price
Max 15% 171
Average 5% 156
Min -8% 137
average price (T+2) /
repurchase price (T+0)
Implied
1QFY18 price
Max 29% 191
Average 11% 164
Min -16% 124
• Repurchase price implied valuation in 1QFY18 should be US$191-124

67. Forward PE ratio (scenario analysis)
Source: Annual report, Invbots
0
20
40
60
80
100
120
140
160
180
8
10
12
14
16
18
20
11/10/11
12/10/11
1/10/12
2/10/12
3/10/12
4/10/12
5/10/12
6/10/12
7/10/12
8/10/12
9/10/12
10/10/12
11/10/12
12/10/12
1/10/13
2/10/13
3/10/13
4/10/13
5/10/13
6/10/13
7/10/13
8/10/13
9/10/13
10/10/13
11/10/13
12/10/13
1/10/14
2/10/14
3/10/14
4/10/14
5/10/14
6/10/14
7/10/14
8/10/14
9/10/14
10/10/14
11/10/14
12/10/14
1/10/15
2/10/15
3/10/15
4/10/15
5/10/15
6/10/15
US$
PER(x)
Close and Implied PER
Best PER Base PER Worst PER Close

68. Forward PER (ex-cash) (Scenario Analysis)
Source: Annual report, Invbots
0
20
40
60
80
100
120
140
160
180
6
7
8
9
10
11
12
13
14
15
16
1/2/14
2/2/14
3/2/14
4/2/14
5/2/14
6/2/14
7/2/14
8/2/14
9/2/14
10/2/14
11/2/14
12/2/14
1/2/15
2/2/15
3/2/15
4/2/15
5/2/15
6/2/15
7/2/15
8/2/15
9/2/15
10/2/15
11/2/15
12/2/15
1/2/16
2/2/16
3/2/16
4/2/16
5/2/16
6/2/16
7/2/16
8/2/16
9/2/16
10/2/16
11/2/16
12/2/16
1/2/17
2/2/17
3/2/17
4/2/17
5/2/17
6/2/17
7/2/17
8/2/17
us$
PER(x)
Close and Implied PER ex-cash
Best PER (Ex-cash) Base PER (Ex-cash) Worst PER (Ex-cash) Close

69. Implied Valuation
Methodology Implied valuation (US$) Period
DCF $193 (base) [$286 (best) – $152 (worst)] 1-year
PER (ex-cash) $233 - $140 [based on 11x ex-cash PER] 1-year
Repurchase implied price $191 - $124 3-month
Historical pattern After iPhone event +3% (+11% to -17%) 30 days
Source: Invbots

70. Q & A

71. Appendix

72. Appendix: Review - Bill of MaterialsCamera Breakdown
Semi Breakdown
Source: Morgan Stanley Research
Mechanical Breakdown
Display Breakdown

73. Appendix: Profile of Invbots China Handset Survey
Male
47%
Female
53%
Samples: 1,114
1053 from So Jump, 61 from Surveybots
Survey period: Aug 2017
Gender
10~20
1%
20~30
40%
30~40
43%
40~50
11%
50~60
4%
60~70
1%
Above 70
0%Age
Apple
Samsung
Sony
Huawei
Xiaomi
OPPO
Vivo
Honor
Meizu
Nubia
Nokia
ZTE
Coolpad
HTC
LG
Lenovo
Asus
40%
24%
7%
12%
5%
4%
Handset brand

74. Implied valuation
Scenario DCF Value
Best
scenario 286
Base
scenario 193
Worst
scenario 152
DCF implied stock price Repurchase price implied stock price
Model
Release
date
Days before the release
90 60 30 15 7 5 3 1
iPhone 5
09/21/2
012 27% 22% 13% 5% 5% 1% 0% 0%
iPhone
5C / 5S
09/20/2
013 5% 17% 1% -5% 0% 1% 3% -1%
iPhone 6
/ 6Plus
09/19/2
014 19% 12% 7% -1% 0% -1% 0% -1%
iPhone
6S
09/25/2
015 -12% -9% 0% 4% -1% 1% 1% 0%
iPhone 7
09/07/2
016 16% 11% 12% -1% 1% 2% 2% 1%
Average 11% 11% 7% 0% 1% 1% 1% 0%
Current price: 164.04
Implied release day price (Sep.12): 165.68
Model
Release
date
Days after the release
1 3 5 7 15 30 60 90
iPhone 5
09/21/2
012 -1% -5% -5% -6% -10% -17% -25% -37%
iPhone
5C / 5S
09/20/2
013 5% 3% 3% 4% 5% 11% 19% 7%
iPhone 6
/ 6Plus
09/19/2
014 0% 1% 0% 0% 0% 7% 7% 18%
iPhone
6S
09/25/2
015 -2% -4% -4% -3% -3% 6% -6% -16%
iPhone 7
09/07/2
016 -3% -3% 3% 6% 5% 8% 1% 11%
Average 0% -2% 0% 0% -1% 3% -1% -3%
Historical event implied stock price

75. 26
44
28 23 26
44
28 23 26
44
29 23 27
45
29 23 27
45
29 24 27
53
108
57 57 50
101
58 58 59
102
64 64 65
121
62 64 65
131
67 69 70
-31
-58
-38
-31 -32
-60
-39
-31 -33
-62
-40
-32 -34
-64
-41
-33 -35
-66
-43
-34 -36
-100
-50
0
50
100
150
200
Gross add Replacement Second hand phones
Shipment volume FY2014A FY2015A FY2016A FY2017E FY2018E FY2019E
iPhone subs 440 600 690 809 929 1051
Gross add 140 180 120 119 120 122
yoy % 0% 29% -33% -1% 1% 1%
Churn 34 20 30 37 32 36
as % of subs 10% 5% 5% 5% 4% 4%
Second hand phones recycled into the
base 75 92 135 154 156 157
yoy % 0% 23% 47% 14% 1% 1%
Sub net adds 106 160 90 81 88 86
Replacement units demanded 125 185 232 248 287 277
Adjusted replacement rate 38% 42% 39% 32% 33% 29%
Total iPhone units demanded 169 231 212 217 249 235
Estimation of iPhone shipment
• The story mainly lies in the replacement cycle
Source: Research report, Invbots

76. Scenario on shipment and ASP
-60%
-40%
-20%
0%
20%
40%
60%
80%
100%
Senario Analysis on iPhone shipment yoy% growth
Best case Base case Worst case
-15%
-10%
-5%
0%
5%
10%
15%
20%
25%
30%
Senario Analysis on ASP shipment yoy% growth
Best case Base case Worst case
• More upside for best case scenario, less downside for worst case

77. Breakdown overview
56% 57%
53% 56%
69% 69%
63% 63%
68% 65%
57% 60%
69%
63%
55%
60%
73%
63%
58% 57%
70%
62%
57% 60%
8% 10% 12% 11%
6% 9%
10% 10% 8% 12%
14% 14%
9%
13% 16% 14%
9%
15% 16% 17%
10%
16% 17% 16%
-20%
0%
20%
40%
60%
80%
100%
iPhone iPad Mac Services Other product iPhone breakdown yoy

78. ASP Greater China
637
596
561
603
687
659 660
555
691
642
595
619
695
655
606
-15%
-10%
-5%
0%
5%
10%
15%
20%
-60%
-40%
-20%
0%
20%
40%
60%
80%
100%
120%
1QFY15
2QFY15
3QFY15
4QFY15
1QFY16
2QFY16
3QFY16
4QFY16
1QFY17
2QFY17
3QFY17
Greater China yoy% Total yoy%

79. Service revenue & Service rev/user base
4,397
4,573 4,485 4,608
4,799
4,996 5,028 5,086
6,056 5,991 5,976
6,325
7,172 7,041
7,266
0%
5%
10%
15%
20%
25%
30%
234,757
214,085
227,402
253,199
264,552
283,837
305,509
332,276
-10%
-5%
0%
5%
10%
15%
FY2015A FY2016A FY2017E FY2018E FY2019E FY2020E FY2021E FY2022E